Australia | 1:08 PM
Sigma Healthcare is expanding at home and abroad, with oral GLP-1 medicines offering further upside.
- Sigma Healthcare’s 1Q update showcases resilient, double-digit growth
- Retailer enjoys structural growth via Beauty, healthcare and GLP-1s
- Potential upside from ongoing store rollout & oral GLP-1s
- Jarden sees untapped UK potential
By Mark Woodruff
Stockbroker Morgans believes Sigma Healthcare’s ((SIG)) merger with Chemist Warehouse, completed on 12 February 2025, forged a pharmacy powerhouse, uniting pharmaceutical wholesaling and distribution with an extensive retail franchise network.
That confidence underpins Morgans' thesis that any share price weakness from a potential co-founder equity selldown offers an opportunity to add to holdings.
Last week's largely in-line September quarter update saw the share price weaken somewhat, but Jarden saw a strong update by the company, with market share increasing and total sales rising by 12.1% between 1 July to 16 October.
For the remainder of the first half of FY27, management expects Chemist Warehouse branded store sales to grow by double digits, supported by Christmas trading.
Managing director and chief executive Vikesh Ramsunder highlighted the company’s global pharmacy network is approaching 1,000 stores, yet Chemist Warehouse accounts for less than 10% of Australia’s more than 5,900 community pharmacy licences.
This leaves room for Chemist Warehouse to expand alongside Amcal and Discount Drug Stores.
Sigma supports more than 880 franchised pharmacies in Australia across Chemist Warehouse, Amcal and Discount Drug Stores, providing product supply, marketing and operational support.
Throughout the period, cost-of-living pressures continued to weigh on discretionary categories, including women’s fragrances, vitamins and supplements, but management points to ongoing tailwinds in categories experiencing structural growth such as beauty, healthcare and GLP-1 adjacent products.
Australian like-for-like sales growth of around 10% matched consensus, while International growth of 15.8% marked “a solid re-acceleration”, according to RBC Capital.
Total international sales rose 30.2% at constant exchange rates.
The operational performance reinforces Ord Minnett’s confidence in Chemist Warehouse’s resilient retail model, with 14 Australian store openings planned for the first half, network optimisation targeting $67m in synergies by FY29 and oral GLP-1 formulations offering further upside from the second half of FY27.
The strategy
Overall, Sigma’s growth depends on expanding pharmacy networks, increasing sales through existing stores and making its combined supply chain more efficient.
To that end, the board aims to capture the remaining merger benefits, sustain growth in Australia, expand internationally at a measured pace and maintain financial discipline.
In Australia, Sigma supplies prescription medicines, over-the-counter products and other pharmacy goods to more than 3,500 pharmacy customers. Its distribution centres buy, store and deliver products to both branded and independent pharmacies.
Sigma also provides warehousing and delivery services to third-party healthcare and consumer-goods companies.
GLP-1s
Sigma has now cycled the initial GLP-1 sales uplift and management expects oral treatments to broaden patient access and support further growth from the second half of FY27.
Jarden sees a growing likelihood of a third-quarter FY27 launch for oral treatments, ahead of its fourth-quarter assumption.
Pricing closer to injectable treatments would also support upgrades to the broker’s like-for-like sales forecasts, which currently assume a -30% discount.
Interestingly, Bell Potter recently noted GLP-1 customers spend an average of 40% more per basket than other shoppers, largely on protein and other dietary supplements.
The full story is for FNArena subscribers only. To read the full story plus enjoy a free two-week trial to our service SIGN UP HERE
If you already had your free trial, why not join as a paying subscriber? CLICK HERE